Roundup - Ideal REI

Roundup

Here, I collect the best articles each week in real estate and personal finance. If you have an article that you'd like to submit, please comment below or email me on the contact page.

The Landlord’s Guide to State & Federal Rental Application Laws

Read it here.

Kind of boring, but it's an important topic!

This article does a great job of breaking down some of the do's and don'ts of taking rental applications.

Overall, I do like the article but I think it needs to be fleshed out in some areas, especially about taking animals.

The article says that emotional support animals and service dogs need to be accepted, but therapy pets do not. Many people might be asking - what's the difference between an emotional support animal and a therapy animal?

That's the key difference. Emotional support dogs are to there to provide support for people with disabilities which are protected under HUD.

Therapy pets are for people with other issues that are not legally classified as disabilities.

What is the Average Profit on a House Flip?

Read it here.

A lot of you have have read somewhere that the average profit on a flip is $66,000 approximately.

I know I've seen that number thrown around a lot of places and I always wondered what I must have done wrong back when I used to do some flips.

The reality is, this number is the Gross Profit, which is simply the difference between the purchase price and selling price. It is not the net profit. It's more accurately called the gross margin.

Gross profit margins are important to consider in any business, because it's about how much room you have to play with on a sale. 

For example, Tiffany's has a gross margin of about 55%, informational products are about 90%. For house flipping, gross margins are much lower, generally 25-30% (if people are following the 70% rule, less if they aren't).

Then you still need to subtract operating costs, rehab, selling costs, carrying costs, etc.

This is where we talk about the best personal finance and real estate articles across the web.

Do you have any suggestions for next week's roundup? Comment below.

6 Genius Ways For Investors To Make The Most Of Social Media

Check it out here.

I'm so guilty of not using social media enough. I think people fall into one of two categories: 

  • 1
    They use social media to connect with friends/family and often get lost in the sauce reading memes and watching videos
  • 2
    They realize that social media is terrible and avoid it completely

I'm more of a #2 person but sometimes get drawn into #1. Regardless, both ways are the wrong way to approach social media.

If you run a business, you really need to time block social media into your calendar.

Basically, set a time, get on there, do what you need to do, then get back to other tasks.

You'll avoid all the memes, motivational quotes, and videos about the latest #challenge. But, you'll get on and talk about your business to all the people who do fall into category #1!

Does a House Flip Have to Be in Perfect Shape to Sell?

Read it here.

Often, we fall into the trap of being perfectionist. It's true with house flips, rentals, and other things.

I really liked this article because it points out that your investment property doesn't need to be perfect.

You really need to look at the cost/benefit ratio. The cost of that last 10% is really high, but the value is really low. So, focus on making in great, but not perfect.

Tips to Help You Invest in Vacation Rentals the Right Way

Check it out.

I've always thought that vacation rentals are a great business, I just haven't every bought any. 

I stayed at an AirBnB in Japan earlier this year, and I thought about how amazing it would be to own some condos in a bunch of different cities around the country and world, so I could turn my travel into a full time business!

Well, I have to get my head out of the clouds and get back to reality. Regardless though, this is a great article about getting started in vacation rentals.

This is where we talk about the best personal finance and real estate articles across the web.

Do you have any suggestions for next week's roundup? Comment below.

Tech Companies Reshaping Commercial Real Estate

Check it out here.

This is pretty cool! I've always loved technology. In fact my first major in college was computer science. Fortunately, I worked my way through several majors before settling on Economics, which helped launch my life in real estate!

One thing about commercial real estate is how it's one of the few industries that barely changes. People have been doing things the same way for decades and technology has barely had an impact.

With that said, there are a lot of companies that are adopting some technology to grow and adapt to the market and gain a competitive edge.

This article outlines some of the key technology players in this space

Zillow Will Rule Everything

Read it here.

OK, that's my title, not theirs, but it's what I took away from the article.

Basically, Zillow got into mortgages. Then it got into house flipping.

Now it wants to expand that and will probably end up dominating the market because of its massive data advantage.

In other words, Zillow will buy houses that it knows has a massive demand behind it. Then it will flip them to their pool of buyers.

Think about it this way. When people search Zillow, they create a history of searches and criteria. Additionally, they can request notifications when properties that fit their criteria gets listed.

So, they know exactly how many people are shopping in a given area and they know exactly what kind of properties they want to buy.

No house flipper could ever compete with that sort of data advantage, and no other online platform can either.

More Options vs More Money

Check it out.

I've recently struggled with this question, so I love that Chad decided to write about it.

In a nutshell, you can choose to pursue more money, or you can pursue more options. Chad, from early on, chose a path where he had more options and flexibility. 

He outsourced work to third parties instead of taking on employees. He had old cars and fixer uppers for homes.

Then, when the time was right, he was able to live abroad for 18 months and manage everything remotely.

It was truly amazing!

But, he passed up a lot of growth opportunities in real estate. He could have far more money now if he opted to do more deals, take on investors, etc.

He seemed more laser focused on what he wanted. For me, I want a life of choices and freedom (which I pretty much have) but I also want to send my kids to the best schools and have nice things.

So, I'm often torn between the money and freedom choice.

I try to earn more money while maintaining my freedom. It's hard to do that and growth is sometimes frustrating and slower than I'd like.

Regardless, this is a great article and gets you thinking!

This week we have some really great articles to preview. The first one is

Mortgages for Forced Savings

Check out the article here - Mortgages as Forced Savings

In this article, The Physician on Fire brings up some great points both for and against using mortgages as forced savings accounts

In a nutshell, most people don't save enough but a mortgage forces them to do that.

One part he got wrong was the claim that homes appreciate. As we know from people who study these things, homes do not appreciate over the long term, though they can move up (or down) for decades at a time.

The reality is that homes DO appreciate at around 2-3%, but inflation averages around 2-3% and there is an overall appreciation of almost exactly 0%.

Though this chart is not indicative of long term trends, it's a great illustration to my point.

buying vs renting a house

Houses haven't appreciated at all

Besides that one nitpicking detail, I do agree that homes are a great way to force the average person to save.

Not because it's a good way to save (because it's not) but because most people have no discipline and won't save.

Saving at 0% return is better than not saving at all!

$100,000 Dream Decimated

Read the Article at 1500 Days

This is a cautionary tale about how volatile your wealth can actually be. In the same month, his stock portfolio was up $60,000 and down $9,000! That's a crazy swing that I know would make me sick to my stomach.

It's good for us all to see, because you might meet your net worth goals but it's all on paper until you sell.

Just because you set your goal at say...$1 million in net worth and then achieve it, doesn't mean you will keep it.

Realtors Get New Tax Deductions

Check out the article here

This is really big news for those of us in the real estate field, because a ton of investors are also real estate agents.

One of the great parts of the new tax law was the 20% deduction on qualified business income. It was a question if real estate agents would get it or not, but apparently after a lot of lobbying, the IRS has decided to interpret the law in a favorable way for agents.

I'm not an expert on this, so, for more details, check out the article.

Do you know any good articles that deserve to be mentioned in my next Roundup? Comment below

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